Pharmaceuticals is a knowledge-based, technology-intensive industry that is uniquely placed to develop and commercialise the outcomes of Australia’s long term investment in medical research.
The Australian pharmaceuticals industry comprises bio medical research, biotechnology firms, originator and generic medicines companies and service related segments including wholesaling and distribution. With exports of $3.9 billion in 2012‑13, pharmaceuticals were one of Australia’s major manufactured exports. The industry employed approximately 16,500 people and spent around $404 million on pharmaceutical manufacturing R&D in 2011‑12. Sales of complementary medicines are worth around $2 billion a year.
Despite Australia’s relatively small population, Australians consume large amounts of medicines. In 2012, pharmaceutical sales in Australia made up a significant share of the global market, and ranked Australia as the twelfth largest consumer market, according to the IMS Institute for Healthcare Informatics Report 2012.
The pharmaceuticals industry receives significant financial support from the Australian Government through the sales of medicines listed in the Pharmaceutical Benefits Scheme (PBS); and the R&D tax incentive. There are approximately 140 separate firms listed as suppliers to the PBS. In 2012‑13, the Government Pharmaceutical Benefits expenditure on accrual accounting basis was around $9 billion. During the same period, the largest firm by PBS sales was AstraZeneca. Its sales represent 12.4 per cent of the value of total sales made to the PBS. The top 10 suppliers by sales contributed more than 67 per cent of the value of total sales made to the PBS. Alphapharm is the largest firm by number of prescriptions on the PBS, accounting for 13 per cent of all prescriptions dispensed under the PBS. The top 10 firms by the number of prescriptions account for a total of just over 73 per cent of total prescriptions written. These data suggest that the Australian market is consistent with the global industry structure.
Australian industry developments have gained worldwide recognition. They include:
- CSL's development of a Swine Flu (N1H1) vaccine
- The discovery and development of the Gardasil vaccine for Human Papilloma Virus through a partnership between Merck Sharp and Dohme and CSL
- Australian biotechnology company Cytopia's $274 million deal with Novartis to develop orally active, small molecule therapeutics targeting JAK3 kinase for the prevention of transplant rejection and the treatment of multiple indications in autoimmune diseases such as rheumatoid arthritis
- The development by Biota Holdings of the flu drug Relenza
- Acrux's US$335 million deal (plus royalties) with Eli Lilly to market Acrux's US FDA approved Axiron®
The Department encourages the development of an internationally competitive pharmaceuticals industry with policies which enhance the operating environment for the industry by:
- Providing policy advice to the Minister for Industry, Innovation and Science on developments in the global pharmaceuticals industry and how they might impact on the Australian operating environment; and;
- Working with key industry stakeholders.
The pharmaceuticals industry activity spans from the technology intensive R&D segment associated with innovative drugs through to the production of generic and over-the-counter medicines. The industry is dominated by horizontally and vertically integrated multinational entities and is more research intensive than most other industries.
By 2020, the annual global spending on medicines is estimated to reach $US 1.4 trillion, despite slowing growth, reduced contribution from developed markets due to patent expiries and the sustained impact of the global economic crisis, according to the IMS Institute for Healthcare Informatics.
Industry R&D activity
Developing a new drug is expensive. Current estimates of the full cost of bringing a new chemical or biological entity to market are around US$1.3 billion. Longer development and approval times, larger and more complex clinical trials, increased expenditures on new technologies, and shifts in product portfolios towards riskier, more expensive therapeutic categories have contributed to a real increase in the development costs.
Accordingly, pharmaceuticals R&D expenditure is rising. The industry spent $404 million on pharmaceutical product manufacturing R&D in Australia in 2011‑12. With 0.3 per cent of the world’s population, Australia produces two per cent of global health and medical research (McKeon’s Review) and has a proud history of eight Nobel laureates in medicine:
This is in large part due to the importance the Government places on investing in Australian scientific research. In the health and medical area, this funding is allocated through a variety of R&D providers and there is considerable interaction between these entities. The bulk of the funding is provided through:
In addition, the Government also supports the industry with R&D funding, via the R&D Tax Incentive Programme. Many pharmaceutical and biotechnology companies have access to the R&D support when they conduct eligible R&D activities in Australia.
For enquiries regarding this website or further information on the pharmaceuticals industry pleases contact:
Health Technologies Section
Advanced Technologies Branch
Department of Industry, Innovation and Science
GPO Box 9839
Canberra ACT 2601